Transcript Folie 1

A Goal for
Climate-Change
Policy
The Stern-Review
Chapter 13
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„The science and economics both
suggest that a shared international
understanding of what the objectives of
climate-change policy should be would
be a valuable foundation for policy.“
(Stern-Review, p. 288)
If policy makers around the world differ:
 Distribution
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of efforts inequitable and inefficient
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different types of goals are not inconsistent
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Any goal should be
 closely
related to the ultimate impacts
 able to adjust over time
 easy to monitor
 clear, simple and specific
A goal for atmospheric concentration
would satisfy these requirements!
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How to select a stabilisation level?
Marginal Benefits:
 Reflect
expected impact on wellbeing of
achieving a lower temperature change and
the reduced risk of extreme events.
Marginal Costs:
 Reflect
the need to accelerate the introduction
of measures against climate change
Uncertainty => only a range is possible
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
stabilisation level should not be above 550
ppm CO2e

stabilisaton at 450 ppm or below very
difficult and costly to reach

The Stabilisation goal should be
between 450-550 ppm CO2e
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Asymmetry
 Not
possible to reach a lower level, if new
information is collected, that implies that CC is
worse than expected
 Possible to allow the concentration level to
rise, if new information is collected, that
implies that CC is less worse than expected
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Uncertainty & Asymmetry =>
A more demanding (not less) long-term policy
should be set!


Policy debate should seek a level between the
lower and upper limit of the range.
It is important that during this process initial
actions to reduce emissions are not delayed.
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The need for strong and urgent action
Case for strong action determined in 3 ways:
1. Bottom-up approach
Chapters 3,4,5,8,9
2. Model-based approach
Chapters 6,10
3. Price-based approach
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1. Bottom-up
Just comparing damages without mitigation
with the costs of mitigation
2. Model-based
Comparison + taking account of interactions
in climate system and global economy
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Bottom-up and Model-based approach:
„The benefits of strong action clearly
outweigh the costs.“ (Stern-Review, p. 285)
Modest net costs today can earn big return
later on!
See red line in Fig. 13.1 and 13.2
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3. Price-based
Comparing marginal costs of abatement with the
social costs of carbon (SCC)
SCC: impact on expected wellbeing by emitting an
extra unit of carbon, at any particular time on the
present value (at that time).
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SCC depends on:
-
-
Size of stock allready in atmosphere
Uncertainties and discount rates
Global Warming Potential (how long in the atmosphere and
when emitted?)
SCC expected to increase over time, because stock is
expected to grow!
One extra unit C: more damage at the margin the later it is
emitted
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Wide range of estimates:

Tol (for DEFRA-Study): $ 29/tCO2 (mean)

PAGE2002 (Stern-Review): $ 85/tCO2
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=> Difficult to apply policy, driven by that
approach
Possible would be: Pigou-Taxation on
GHG-intensive goods and services

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DEFRA vs. Stern-Review
aspects that tend to push SCC of Stern-Review:
 full
„expected utility“ and risk aversion
 greater weight to „non market“ impacts
 low pure time preference
 equity weighting
 uncertainty about climate sensitivity
 amplifying feedback risks
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Costs of mitigation
Extra mitigation costs of choosing a lower goal are small
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A reduction from 750ppm to 650ppm is cheaper than from 550ppm to 450ppm
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Optimal mitigation
Temperature
reduction
Nordhaus and
Boyer (1999)
557 ppm to 538
ppm (in 2100)
2.42 °C to 2.33 °C
Tol (1997)
-
4 °C to 3.6-3.9 °C
Manne et al.
(1995)
800 ppm to 750
ppm (in 2100)
3.85 °C to 3,6 °C
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Problems:
 Uncertanties
 amplifying feedbacks
 tipping points

Manne et al. (1995): higher discount rate

Tol (1997): relatively low cost of climate change

Nordhaus and Boyer (1999): low and slow economical
growth
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EU:
 temperature change less than 2 °C

reduced risk of climate change impacts
and avoid thresholds effects

some critical statements for the 2 °C limit
 hard
to reach
 Ambitious target
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„Policy should ensure that abatement
efforts intensify over time. Emissions
reductions should be driven to the
point where their marginal costs keep
pace with the rising social cost of
carbon.“ (Stern-Review, p. 302)
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The social cost of carbon will be lower with a sensible climate
change policy than under „business as usual“
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H... High BAU trajectory
S... Stabilisation trajectory
E... Emissions/year
Benefits of CC-Policy:
Annual Costs of Abatement (appr.):
Benefits less Costs
(Benefits of CC-Policy):
Difference between
SCC of the two
trajectories
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x
BAUEmissions
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The Role of adaptation

can reduce the negative impacts of future climate
change

no direct prevention

Mitigation prevents climate change and damage costs

Mitigation  reducing cost of climate change over the
next 30-50 years
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„In the longer run, both adaptation and
mitigation will be required to reduce
climate-change
damage
in
costeffective and sustainable ways.“ (Stern-Review,
p. 306)
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The three approaches can be used to crosscheck conclusions from adopting any one
of them.
„...spending somewhere in the region of
1% of gross world product on average
forever could prevent the world losing
the equivalent of 5 - 20% of gross world
product for ever.“ (Stern-Review, p. 285)
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Thanks for your attention
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QUESTIONS
1. What are the three aproaches to
„examine strong and urgent action“ and
what are their characterstics?
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2. Why is it important, that we find a shared
international understandig of what the
objectives of climate-change-policy should
be?
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3. What are the advantages of choosing the
atmospheric concentration level as a goal?
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4. It is only possible to find a range for the
target of the atmospheric concentration
level and not a specific value . Why?
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5. What is the main message of the model
based estimates for the increase in
mitigation costs from reducing a
stabilisation goal?
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6. Why is the stabilisation level at 450 ppm
CO2e today hardly to reach? Which points
are important to get a lower emission
level?
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7. The EU adopted an objective to limit
global average temperature change to less
than 2°C. Is that possible and what are the
arguments of the critic?
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8. What are the differences between
mitigation and adaptation?
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